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Student name BUSS1000 Instructor name 27 March 2020 Case Study – CSL Limited This essay presents a case study of CSL Limited, an Australian biotechnology company, in the scope of their dominant business role in society, as well as their strategy evaluation in response to the competitive environment. The role of CSL Limited in society o An overview Established in 1916 as an Australian federal government body, Commonwealth Serum Laboratories (CSL) has been operating to treat and prevent severe human medical conditions by engaging in product research and development, manufacture and marketing. Since CSL got privatized and listed on the Australian Securities Exchange (ASX) in 1994, it has acquired several companies including Aventis Behiring, Nabi, Novartis and Calimmune, and now been known as the world’s fifth largest biotechnology company, with more than 25,000 employees all over the globe devoted to helping patients in nearly 70 countries (CSL Limited, 2020a). o A shared value Despite being a public company, which means it operates for-profit, maximizing financial income is never the main epitome of CSL’s operations. Rather, the primary orientation of CSL toward society is to create shared value (CSV), meaning it does not only focus on generating benefits for its investors, but also other external stakeholders. At the center of CSL’s strategies 1

lies the mission of “to develop and deliver innovative medicines that saves lives, protect public health and help people with life-threatening medical conditions live full lives” (CSL, 2020a, p. 6). CSL takes pride in fulfilling the unmet needs of the patients in the therapy areas they treat as a main value and core competency. Moreover, they appreciate and regard their human talents as the greatest asset. Last but not least, the culture of progressing innovation is also one of the core principles at CSL Limited (2020a). o Corporate social responsibility Although CSL Limited operates dominantly in a CSV oriented way, they also engage heavily in corporate social responsibility (CSR), which involves going beyond economic and legal responsibilities to give back to the society. CSL Limited aims to support the United Nation’s sustainable development goals in particular of the “good health and well-being, quality education, gender equality, decent work and economic growth, industry, innovation and infrastructure, responsible consumption and production, climate action” (CSL Limited, 2020a, p. 10). CSL Limited has identified their most important sustainability topics as below: 1. Access to healthcare 2. Corporate governance 3. Financial performance and business strategy 4. Product safety and quality 5. R&D – products and services innovation 6. Employment recruitment, development and retention 7. Supply chain management 8. Ethical marketing 2

9. Bribery, corruption and anti-competitive behavior (CSL Limited, 2020, p. 13)

The “CSL Limited Annual Report 2019” (2020, p. 6), provides financial statistics for FY2019, stating an annual revenue of $8.5 million. Despite CSL’s efforts and success in making contributions to the society, CSL has managed to create value for both greater community and its internal shareholders. Ultimately a conclusion can be drawn that CSL’s dominant orientation toward society is to create shared value, whilst involving in corporate social responsibility.

Strategy evaluation – PESTLE analysis In this section, a PESTLE framework is used to evaluate CSL’s competitive environment as a context for CSL’s strategy analysis. o Political factors

Fiscal policy is one political factor that has a profound impact on businesses in general. The Australian government in the past few decades has spent a fairly large portion of its finances on the public health and medical research. With an effort to make medicare more affordable in the recent Pharmaceutical Benefits Scheme (PBS), the Australian government has spent more than $331 million subsidy for new and amended listings on the PBS in 2019, including innovative medicines to cure lung, kidney, bladder and skin cancers and diseases (Australian Treasury, 2019). In addition, the government also strives to ensure Australia in the position of a leader in world-class medical research with the passing of 5 billion Medical Research Future Fund Ten Year Investment Plan, which aims to improve patient care and access to clinical trials. Fiscal 3

policy, affecting how much of the budget is distributed to medicines and medical research funding, has an immediate impact on the demand for the use of pharmaceutical products which boosts sales for CSL.

As a part of fiscal policy, taxation rates enormously impact corporation’s net income. In Australia, as big as a company like CSL Limited, they need to pay a company tax rate of 30%, which is the highest rate in the category (Australia Taxation Office, 2019). Due to the nature of how it is determined by the federal government each year, this rate is subject to change accordingly annually. As it is crucial to take company taxation rates into account of a company’s financial performance which directly links to the profits of its shareholders, CSL must be aware of the relevant political policy change of the competitive market in which the business situated.

o Economic factors

Grand View Research in their recent report (2017) states that “the global biotechnology market size is expected to reach USD 727.1 billion by 2025, at a CAGR of 7.4%...the emergence of certain key themes in the market is expected to drive growth in this industry to a lucrative extent”, indicating significant percentage growth for the whole industry as well as CSL Limited.

The Reserve Bank of Australia has recently cut the cash rate to a new record low as 0.25%, as a responding measure to minimized the adverse influence of the novel coronavirus pandemic, and will not increase it till an increase of employment situation is achieved with the inflation between 2 and 3 percent (Trading Economics, 2020a, 2020b). That is, the cost of loan will be tremendously lower than ever before. As a result, CSL will be able to take the advantage and 4

plan their financing strategies accordingly. Therefore, it has become a critical time point for CSL to invest any prospect projects and expand their business, letting alone the nature of their business is greatly associated with the current global public health crisis, but also for the great opportunity the low interest rate for borrowing money.

Overseas market trading has a lot to do with the currency exchange rates. As of today, the value of the Australian dollars remains quite low, sitting 0.5931 USD per 1 AUD (Reserve Bank of Australia, 2020). In other words, CSL’s exporting business could come across quite appealing to foreign customers, since the price after conversion is relatively lower in comparison to the overseas competitors.

o Social factors

In modern theories of health and well-being, the concepts of “holistic care” “quality of life” “treating patients as a person rather than a diagnosis” have become a trend. Holistic care means “patient care that considers the physical, emotional, social, economic, and spiritual needs of the person, his or her response to illness and the effect of the illness on the ability to meet self-care needs” (Ventegodt et al., 2016, p. 1935). This contemporary view on general health and wellbeing has been validated in health science literature and accepted by the general public, especially those in the developed countries like Australia. To better fulfill the unmet needs of the people seen as a biopsychosocial human being rather than a patient, it requires the organization to go an extra mile of effort and resources. With the priority of supporting for patient communities, CSL is committed to numerous strategic programs upon which the majority of their total funding is directed. CSL has partnered with World Federation of 5

Hemophilia (WFH) to empower the community of patients with bleeding disorders through education and advocacy (CSL Limited, 2020).

To support a welling of their employees’ family, CSL has several programs in place such as family-friendly workplace and STEM program that earned community award. For such achievement CSL has earned several external recognitions including “Top 100 Most Diverse & Inclusive Organizations Globally” “Most Attractive Employers in Switzerland” and “America’s Best Large Employers” (CSL Limited, 2020a).

o Technological factors

As a biotechnology company, it is crucial for CSL to be wary of the latest developments in technology, not to mention how fast-paced it can get. A significant number of technological innovations have drastically taken place and will continue to revolutionize the field since the 1990s. Some of the current edge-cutting innovations include Genome sequencing, precision medicine, health wearables, 5G mobile implications, blockchain solutions and so on (The Medical Futurist, 2020; Mundada, 2019). To grow with the trends as a global leader in the industry, CSL must adapt to continually provide new products to satisfy ever-changing expectations from the customers, otherwise their competitiveness will be at risk.

According to the World Health Organization, the current COVID-19 pandemic has caused over 465,000 confirmed cases with a dead toll over 21,000 across 200 countries, putting the whole world at an emergency state (2020). In response to this urgent event, CSL has offered to

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contribute their expertise, technologies and facilities to help develop the coronavirus vaccines and treatments (2020b).

o Legal factors

Legal factors such as laws, regulations and guidelines set a reference for the industry to operate up to a certain standard and responsibility. CSL strives to keep up to the highest standards through the compliance of international quality standards, which are reflected in their international and local policies and code of practices. In 2017, CSL issued a new policy named Global Serious Complaints (previously known as the “Whistleblower”) to offer a platform where its staff members and third parties can anonymously report severe issues or concerns without worries of unfair treatments or punishments. CSL’s policy continues to provide a healthy environment internally and externally for all their stakeholders in terms of reporting legal or operational matters all over their international operations. So far no complaints of organizational risks or allegations caused by any regulatory action or by legal authorities were received (CSL Limited, 2020a).

o Environmental factors The environmental standards in different industries can impact the profitability of corporations to different extents. CSL recognizes the importance of incorporating environmental responsibilities in their daily operations including energy, water and other natural resources as the fundamental necessities to their therapeutic productions. Just like any other medical products, the manufacturing procedures, packaging and the logistics of the CSL products generate greenhouse gas emissions and waste. To address their environmental responsibilities, 7

CSL is devoted to mitigating the threats to environment to a bare minimum, without sacrificing the safety, quality and affordability of their products. Such commitment is established at the management level and reflected in their Code of Responsible Business Practice (CSL Limited, 2020a). In addition, CSL’s Global Environment, Health, Safety & Sustainability Policy and Statement on climate change and their Environment, Health, Safety and Sustainability (EHS2) Management System are also made accessible to the entire staff member team as a guideline to regulate their practices (CSL Limited, 2020a).

In conclusion, it is evident that CSL Limited operates in a dominant role of creating shared value to not only its stakeholders but also the society with great involvement in corporate social responsibilities.

Reference List Australian Taxation Office. (2020). Company tax rates 2019-20. Retrieved from https://www.ato.gov.au/Rates/Company-tax/ Australian Treasury. (2019). Budget 2019-20. Retrieved from https://budget.gov.au/2019-20/content/services.htm CSL Limited. (2020a). CSL Limited Annual Report 2019. Retrieved from https://www.csl.com/-/media/csl/documents/annual-report-docs/csl-ltd-annual-report2019-full.pdf?la=en-us&hash=AC57DA1C6E85B66162B25238509C47596E1CA401 CSL Limited. (2020b). Our Offer To Help Battle Coronavirus. Retrieved from: https://www.csl.com/news/2020/our-offer-to-help-battle-coronavirus 8

Grand View Research. (2017). Biotechnology Market Size Worth $727.1 Billion By 2025 | CAGR: 7.4%. Retrieved from https://www.grandviewresearch.com/press-release/globalbiotechnology-market Mundada, R. (2019). 11 Healthcare Technology Trends for 2019. Retrieved from: https://getreferralmd.com/2018/12/healthcare-trends-of-2019/ Reserve Bank of Australia. (2020). Exchange Rates. Retrieved from https://www.rba.gov.au/statistics/frequency/exchange-rates.html The Medical Futurist. (2020). 10 Ways Technology Is Changing Healthcare. Retrieved from: https://medicalfuturist.com/ten-ways-technology-changing-healthcare/ Trading Economics. (2020a). Australia interest rate. Retrieved from https://tradingeconomics.com/australia/interest-rate

Trading Economics. (2020b). Australia inflation rate. Retrieved from https://tradingeconomics.com/australia/inflation-cpi

Ventegodt S., Kandel I., Ervin D.A., Merrick J. (2016) Concepts of Holistic Care. In: Rubin I.L., Merrick J., Greydanus D.E., Patel D.R. (eds) Health Care for People with Intellectual and Developmental Disabilities across the Lifespan. Springer, Cham

World Health Organization. (2020). Coronavirus disease (COVID-19) outbreak situation. Retrieved from: https://www.who.int/emergencies/diseases/novel-coronavirus-2019

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